Oregon Considers Raising Taxes on Fuel-Efficient Cars

Oregon legislators are expected to consider a bill during the 2013 session to require drivers with a vehicle getting 55 or more miles to the gallon to pay a per-mile tax, starting in 2015. As a bill that would raise taxes, the legislation would require a three-fifths majority in in both the House and Senate to pass.

Declining Tax Revenue

Supporters say the bill is necessary to shore up gasoline tax revenue that is declining as a result of the owners of fuel efficient cars purchasing less gasoline.

With the advent of electric cars and hybrid vehicles attaining fuel efficiency of 55 miles per gallon or more, states are starting to feel the pinch on infrastructure funding usually obtained through gasoline taxes. The dollars used to fill potholes in local streets and resurface interstate highways are shrinking, while usage of those roads continues to climb.

Opponents say the change would frustrate efforts to induce consumers to purchase and drive fuel-efficient vehicles.

In 2011 the Oregon Legislature considered a similar bill aimed at electric cars and hybrids. The bill did not make it to the House floor.

Searching for Fair System

John Charles, president and CEO of the Cascade Policy Institute, says he is in favor of every motorist in Oregon paying their share to reconstruct old roads and build new ones.

Having served on Oregon’s Road User Fee Task Force in 2001-2010, Charles says state officials have carefully studied their options to implement this kind of road tax.

“Oregon is a very progressive state when it comes to this area,” said Charles. “We realize that a small vehicle does not impact the roadways with the same damaging effects of larger transport vehicles. For this reason we were one of four states that implemented Axle Weight Tables” that tax vehicles based on wheel base, the number of axles, and weight per axle.

‘A Big Issue’

There are several competing ideas on how to restructure taxes for infrastructure upkeep. Some argue vehicle mileage should be monitored annually and taxes paid on a per-mile basis. Under this scenario, a transponder placed in vehicles could keep track of miles driven. State officials could then send a tax bill to vehicle owners or owners could elect to have the taxes automatically taken from their bank accounts.

“The transfer of the burden for road repair and construction is unfair if everyone is not expected to do his part,” said Charles. “At this point, there are not many fuel-efficient and electric vehicles, but as more and more take to the road, this will be a big issue. It’s good to determine how to deal with it now."

“The most important thing for now,” Charles added, “is not allowing this to become complicated. Over time other options can be considered. For now we need to get some kind of system adopted and move forward.”